Cautionary Note Regarding Forward-Looking Statements This report contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, particularly under the caption “Outlook” below. When used in this report, the words “believes,” “anticipates,” “expects,” “estimates,” “appears,” “plans,” “intends,” “may,” “should,” “could,” “outlook,” “continues,” “remains” and similar expressions are intended to identify forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, they are subject to numerous risks and uncertainties and involve certain assumptions. Actual results may differ materially from those expressed in forward-looking statements, and we can provide no assurances that such plans, intentions or expectations will be implemented or achieved. Many of these risks and uncertainties are discussed in detail and, where appropriate, updated in our filings with the U.S. Securities and Exchange Commission (“SEC”), in particular in our Annual Report on Form 10-K for the fiscal year ended September 27, 2025 (our “2025 Annual Report”). You should carefully review these risks and uncertainties. 18 All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made, and we do not undertake any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by law. It is not possible to anticipate and list all risks and uncertainties that may affect our business, future operations or financial performance; however, they include, but are not limited to, the following: ● general economic and competitive conditions in the markets in which we operate, including uncertainty over global trade policies and the financial impact of related tariffs and retaliatory tariffs; ● changes in the spending levels for nonresidential and residential construction and the impact on demand for our products; ● changes in the amount and duration of transportation funding provided by federal, state and local governments and the impact on spending for infrastructure construction and demand for our products; ● the cyclical nature of the steel and building material industries; ● credit market conditions and the relative availability of financing for us, our customers and the construction industry as a whole; ● the impact of rising interest rates on the cost of financing for our customers; ● fluctuations in the cost and availability of our primary raw material, hot-rolled carbon steel wire rod, from domestic and foreign suppliers; ● competitive pricing pressures and our ability to raise selling prices in order to recover increases in raw material or operating costs; ● changes in U.S. or foreign trade policy affecting imports or exports of steel wire rod or our products; ● unanticipated changes in customer demand, order patterns and inventory levels; ● the impact of fluctuations in demand and capacity utilization levels on our unit manufacturing costs; ● our ability to further develop the market for engineered structural mesh (“ESM”) and expand our shipments of ESM; ● legal, environmental, economic or regulatory developments that significantly impact our business or operating costs; ● unanticipated plant outages, equipment failures or labor difficulties; ● the impact of cybersecurity breaches and data leaks; and ● the risks and uncertainties discussed under “Item 1A. Risk Factors” in our 2025 Annual Report and in other filings made by us with the SEC. Overview Insteel Industries Inc. (“we,” “us,” “our,” “the Company” or “Insteel”) is the nation’s largest manufacturer of steel wire reinforcing products for concrete construction applications. We manufacture and market prestressed concrete strand (“PC strand”) and welded wire reinforcement (“WWR”), including ESM, concrete pipe reinforcement and standard welded wire reinforcement. Our products are sold primarily to manufacturers of concrete products and concrete contractors for use, primarily, in nonresidential construction applications. We market our products through sales representatives who are our employees. We sell our products nationwide across the U.S. and, to a much lesser extent, into Canada, Mexico and Central and South America, shipping them primarily by truck, using common or contract carriers. Our business strategy is focused on: (1) achieving leadership positions in our markets; (2) operating as the lowest cost producer in our industry; and (3) pursuing growth opportunities within our core businesses that further our penetration of the markets we currently serve or expand our footprint. 19 On October 21, 2024, we, through our wholly-owned subsidiary, Insteel Wire Products Company (“IWP”), purchased substantially all of the assets, other than cash and accounts receivable, of Engineered Wire Products, Inc. (“EWP”) and certain related assets of Liberty Steel Georgetown, Inc. (“LSG”) for an adjusted purchase price of $67.0 million (the “EWP Acquisition”). EWP was a leading manufacturer of WWR products for use in nonresidential and residential construction. We acquired EWP’s inventories, production equipment, production facilities located in Upper Sandusky, Ohio and Warren, Ohio and certain equipment from LSG located in Georgetown, South Carolina. Subsequent to the acquisition, we elected to consolidate our WWR operations with the closure of the Warren facility and relocation of certain equipment to our existing WWR facilities. On November 26, 2024, we, through our wholly-owned subsidiary, IWP, purchased certain assets of O’Brien Wire Products of Texas, Inc. (“OWP”) for a purchase price of $5.1 million (the “OWP Acquisition”). OWP was a manufacturer of WWR products for use in nonresidential and residential construction. We acquired certain of OWP’s inventories and all of the production equipment. Subsequent to the acquisition, we elected to consolidate our WWR operations with the relocation of certain acquired equipment from OWP to our existing WWR facilities. Results of Operations Statements of Operations – Selected Data (Dollars in thousands) Three Months Ended Nine Months Ended June 27, June 28, June 27, June 28, 2026 Change 2025 2026 Change 2025 Net sales $ 197,659 9.9 % $ 179,886 $ 530,236 12.8 % $ 470,262 Gross profit 20,104 (34.7 %) 30,772 54,657 (15.7 %) 64,830 Percentage of net sales 10.2 % 17.1 % 10.3 % 13.8 % Selling, general and administrative expense $ 8,516 (19.7 %) $ 10,607 $ 26,988 (7.9 %) $ 29,294 Percentage of net sales 4.3 % 5.9 % 5.1 % 6.2 % Restructuring charges, net $ - N/M $ 843 $ 51 N/M $ 2,201 Acquisition costs - N/M 27 - N/M 325 Interest income (188 ) (60.2 %) (472 ) (619 ) (60.7 %) (1,574 ) Effective income tax rate 22.8 % 23.3 % 22.3 % 23.4 % Net earnings $ 9,019 (40.5 %) $ 15,159 $ 21,829 (17.5 %) $ 26,470 "N/M" = not meaningful Third Quarter of Fiscal 2026 Compared to Third Quarter of Fiscal 2025 Net Sales Net sales for the third quarter of 2026 increased 9.9% to $197.7 million from $179.9 million in the prior year quarter, reflecting an 8.1% increase in average selling prices and a 1.7% increase in shipments. The increase in average selling prices was driven by price increases implemented to recover higher raw material, freight expense and operating costs. The increase in shipments was primarily attributable to improved demand in our infrastructure and commercial construction end markets. Gross Profit Gross profit for the third quarter of 2026 decreased 34.7% to $20.1 million, or 10.2% of net sales, from $30.8 million, or 17.1% of net sales, in the prior year quarter due to lower spreads between average selling prices and raw material costs ($8.5 million), other material costs and adjustments ($2.1 million) and higher manufacturing costs ($630,000) partially offset by an increase in shipments ($518,000). The decrease in spreads was driven by higher raw material costs ($20.5 million) and an increase in freight expense ($2.7 million) partially offset by higher average selling prices ($14.7 million). 20 Selling, General and Administrative Expense Selling, general and administrative expense (“SG&A expense”) for the third quarter of 2026 decreased 19.7% to $8.5 million, or 4.3% of net sales, from $10.6 million, or 5.9% of net sales, in the prior year quarter primarily due to lower compensation expense ($2.2 million) and the relative year-over-year change in the cash surrender value of life insurance policies ($303,000) partially offset by higher employee benefits ($294,000) and legal ($288,000) expenses. The decrease in compensation expense was primarily driven by lower incentive plan expense due to a decline in financial results. The cash surrender value of life insurance policies increased $761,000 in the current year quarter compared to $458,000 in the prior year quarter due to the corresponding changes in the value of the underlying investments. The increase in employee benefits expense was primarily related to higher employee medical expenses in the current quarter. Legal expenses increased due to costs associated with various legal matters. Restructuring Charges, Net Net restructuring charges of $843,000 were incurred in the prior year quarter related to the closure of the Warren, Ohio facility, which had been acquired through the EWP Acquisition, and expenses related to the consolidation of our WWR operations. Net restructuring charges for the prior year quarter included asset impairment charges ($408,000), equipment relocation costs ($267,000) and facility closure costs ($168,000). Interest Income Interest income decreased $284,000 from the prior year quarter due to lower average cash balances and interest rates. Income Taxes Our effective tax rate for the third quarter of 2026 decreased to 22.8% from 23.3% for the prior year quarter primarily due to changes in book versus tax differences. Net Earnings Net earnings for the third quarter of 2026 decreased to $9.0 million ($0.46 per share) from $15.2 million ($0.78 per share) in the prior year quarter primarily due to the decrease in gross profit and interest income partially offset by lower SG&A expense and restructuring charges. First Nine Months of Fiscal 2026 Compared to First Nine Months of Fiscal 2025 Net Sales Net sales for the first nine months of 2026 increased 12.8% to $530.2 million from $470.3 million in the prior year period, reflecting a 13.1% increase in average selling prices, while shipments were relatively unchanged. The increase in average selling prices was driven by price increases implemented to recover higher raw material, freight expense and operating costs. Gross Profit Gross profit for the first nine months of 2026 decreased 15.7% to $54.7 million, or 10.3% of net sales, from $64.8 million, or 13.8% of net sales, in the prior year period. The year-over-year decrease was primarily due to lower spreads between average selling prices and raw material costs ($3.6 million), other material costs and adjustments ($3.6 million), higher manufacturing costs ($2.7 million) and a decrease in shipments ($180,000). The decrease in spreads was driven by higher raw material costs ($60.5 million) and an increase in freight expense ($3.9 million) partially offset by higher average selling prices ($60.8 million). Selling, General and Administrative Expense SG&A expense for the first nine months of 2026 decreased 7.9% to $27.0 million, or 5.1% of net sales, from $29.3 million, or 6.2% of net sales, in the prior year period primarily due to lower compensation expense ($2.8 million) and the relative year-over-year change in the cash surrender value of life insurance policies ($624,000) partially offset by higher legal ($545,000) and employee benefits ($473,000) expenses. The decrease in compensation expense was largely driven by lower incentive plan costs due to a decline in financial results. The cash surrender value of life insurance policies increased $776,000 in the current year period compared with $152,000 in the prior year period due to the corresponding changes in the value of the underlying investments. Legal expenses increased due to costs associated with various legal matters. The increase in employee benefits expense was largely related to higher employee medical expenses during the current year period. 21 Restructuring Charges, Net Net restructuring charges of $51,000 were incurred in the first nine months of 2026 related to the closure of the Warren, Ohio facility, which had been acquired through the EWP Acquisition, and expenses related to the consolidation of our WWR operations. Net restructuring charges for first nine months of 2026 included equipment relocation costs ($48,000) and facility closure costs ($3,000). Net restructuring charges of $2.2 million were incurred in the prior year period for asset impairment charges ($1.0 million), facility closure costs ($604,000), equipment relocation costs ($345,000) and employee separation costs ($251,000). Acquisition Costs Acquisition costs of $325,000 were incurred in the first nine months of 2025 for legal, accounting and other professional fees related to the EWP Acquisition and the OWP Acquisition. Interest Income Interest income decreased $1.0 million from the prior year period due to lower average cash balances and interest rates. Income Taxes Our effective tax rate for the first nine months of 2026 decreased to 22.3% from 23.4% for the prior year period. The decrease was primarily driven by a reduction in the valuation allowance on deferred tax assets expected to be utilized, as well as the calculation of state deferred tax balances. Net Earnings Net earnings for the first nine months of 2026 decreased to $21.8 million ($1.12 per share) from $26.5 million ($1.35 per diluted share) in the prior year period primarily due to the decrease in gross profit and interest income partially offset by the net change in restructuring charges and acquisition-related costs and lower SG&A expense. Liquidity and Capital Resources Selected Financial Data (Dollars in thousands) Nine Months Ended June 27, June 28, 2026 2025 Net cash provided by operating activities $ 18,028 $ 44,170 Net cash used for investing activities (9,597 ) (78,811 ) Net cash used for financing activities (24,114 ) (23,232 ) Net working capital 200,734 173,817 Total debt - - Percentage of total capital - - Shareholders' equity $ 371,400 $ 356,208 Percentage of total capital 100.0 % 100.0 % Total capital (total debt + shareholders' equity) $ 371,400 $ 356,208 22 Operating Activities Operating activities provided $18.0 million of cash during the first nine months of 2026 primarily from net earnings adjusted for non-cash items partially offset by a net increase in working capital. Working capital used $17.5 million of cash due to a $29.2 million increase in inventories and a $2.0 million increase in accounts receivable partially offset by a $13.7 million increase in accounts payable and accrued expenses. The increase in inventories was the result of higher raw material purchases together with higher average unit costs. The increase in accounts receivable was primarily due to higher average selling prices. The increase in accounts payable and accrued expenses was largely due to higher raw material purchases. Operating activities provided $44.2 million of cash during the first nine months of 2025 primarily from net earnings adjusted for non-cash items partially offset by a net increase in working capital. Working capital, net of adjustments for assets and liabilities acquired, used $0.2 million of cash due to a $24.9 million increase in accounts receivable and a $17.9 million increase in inventories partially offset by a $42.6 million increase in accounts payable and accrued expenses. The increase in accounts receivable was largely driven by higher average selling prices combined with an increase in shipments. The increase in inventories was the result of higher raw material purchases near the end of the period together with higher average unit costs. The increase in accounts payable and accrued expenses was related to higher raw material purchases near the end of the period, higher unit costs and an increase in accrued salaries, wages and related expenses. We may elect to adjust our operating activities as there are changes in our construction end-markets, which could materially impact our cash requirements. While a downturn in the level of construction activity adversely affects sales to our customers, it generally reduces our working capital requirements. Investing Activities Investing activities used $9.6 million of cash during the first nine months of 2026 compared to using $78.8 million during the prior year period primarily due to the EWP Acquisition ($67.0 million) and the OWP Acquisition ($5.1 million) partially offset by higher capital expenditures ($2.6 million). Capital expenditures increased to $9.1 million from $6.5 million in the prior year period and are expected to total up to approximately $15.0 million for fiscal 2026. Capital expenditures for fiscal 2026 are primarily directed toward cost and productivity improvement initiatives, investments in the growth of our ESM business and routine maintenance requirements. Our investing activities are largely discretionary, providing us with the ability to significantly curtail outlays when warranted based on business conditions. Financing Activities Financing activities used $24.1 million of cash during the first nine months of 2026 compared to $23.2 million during the prior year period. During the first nine months of 2026, $21.1 million of cash was used for dividend payments (including a special dividend of $19.4 million, or $1.00 per share, and regular quarterly dividends totaling $1.7 million, or $0.09 per share) and $2.7 million for the repurchase of common stock. During the first nine months of 2025, $21.2 million of cash was used for dividend payments (including a special dividend of $19.4 million, or $1.00 per share, and regular quarterly dividends totaling $1.8 million, or $0.09 per share) and $2.0 million for the repurchase of common stock. Cash Management Our cash is principally concentrated at one major financial institution, which at times exceeds federally insured limits. We invest excess cash primarily in money market funds, which are highly liquid securities that bear minimal risk. Credit Facility We have a $100.0 million revolving credit facility (the “Credit Facility”) that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements. In March 2023, we amended our credit agreement to extend the maturity date of the Credit Facility from May 15, 2024, to March 15, 2028 and replaced the London Inter-Bank Offered Rate with the Secured Overnight Financing Rate. The Credit Facility provides for an accordion feature whereby its size may be increased by up to $50.0 million, subject to our lender’s approval. Advances under the Credit Facility are limited to the lesser of the revolving loan commitment amount (currently $100.0 million) or a borrowing base amount that is calculated based upon a percentage of eligible receivables and inventories. As of June 27, 2026, no borrowings were outstanding on the Credit Facility, $98.7 million of borrowing capacity was available and outstanding letters of credit totaled $1.3 million (see Note 10 to the consolidated financial statements). We believe that, in the absence of significant unanticipated funding requirements, cash and cash equivalents, cash generated by operating activities and the borrowing availability provided under the Credit Facility will be sufficient to satisfy our expected requirements for working capital, capital expenditures, dividends and share repurchases, if any, in both the short- and long-term. We also expect to have access to the amounts available under the Credit Facility as required. However, should we experience future reductions in our operating cash flows due to weakening conditions in our construction end-markets and reduced demand from our customers, we may need to curtail capital and operating expenditures, cease dividend payments, delay or restrict share repurchases and/or realign our working capital requirements. 23 Should we determine, at any time, that we require additional short-term liquidity, we would evaluate the alternative sources of financing potentially available to provide such funding. There can be no assurance that any such financing, if pursued, would be obtained, or if obtained, would be adequate or on terms acceptable to us. However, we believe that our strong balance sheet, flexible capital structure and borrowing capacity available to us under our Credit Facility position us to meet our anticipated liquidity requirements for the foreseeable future, including the next 12 months. Seasonality and Cyclicality Demand in our markets is both seasonal and cyclical, driven by the level of construction activity, but can also be impacted by fluctuations in the inventory positions of our customers. Shipments are seasonal, typically reaching their highest level when weather conditions are the most conducive to construction activity. As a result, assuming normal seasonal weather patterns, shipments and profitability are usually higher in the third and fourth quarters of the fiscal year and lower in the first and second quarters. Construction activity and demand for our products are cyclical based on overall economic conditions, although there can be significant differences between the relative strength of nonresidential and residential construction for extended periods. Impact of Inflation We are subject to inflationary risks arising from fluctuations in the market prices for our primary raw material, hot-rolled carbon steel wire rod, and, to a lesser extent, labor, freight, energy and other operating costs associated with our manufacturing processes. We have generally been able to adjust our selling prices to pass through increases in these costs or offset them through various cost reduction and productivity improvement initiatives. However, our ability to raise our selling prices depends on market conditions and competitive dynamics, and there may be periods during which we are unable to fully recover increases in our costs. During the first nine months of 2026, higher raw material costs, freight and other operating costs outpaced the increase in our selling prices. The timing and magnitude of any future increases in our raw material costs, freight, other operating costs and the selling prices for our products are uncertain at this time. Contractual Obligations There have been no material changes in our contractual obligations and commitments as disclosed in our 2025 Annual Report other than those which occur in the ordinary course of business. Critical Accounting Estimates Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information. The preparation of our financial statements requires the application of these accounting principles in addition to certain estimates and judgments based on current available information, actuarial estimates, historical results and other assumptions believed to be reasonable. These estimates, assumptions and judgments are affected by our application of accounting policies, which are discussed in our 2025 Annual Report. Estimates are used for, but not limited to, determining the net carrying value of trade accounts receivable, inventories, recording self-insurance liabilities and other accrued liabilities. Actual results could differ from these estimates. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” included in our 2025 Annual Report for further information regarding our critical accounting policies and estimates. As of June 27, 2026, none of our accounting estimates were deemed to be critical for the accounting periods presented, which is consistent with our assessment of critical accounting estimates disclosed in our 2025 Annual Report. Recent Accounting Pronouncements Refer to Note 2 of the Notes to Consolidated Financial Statements in Item 1 of this Quarterly Report for recently issued accounting pronouncements including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements. 24 Outlook As we move into the fourth quarter of fiscal 2026, we remain positive about our business outlook. Customer sentiment remains favorable, supported by healthy activity in our publicly funded infrastructure markets. Private nonresidential construction remains driven by data center-related projects, some of which continue to experience schedule delays. We believe these delays are timing-related and do not reflect weakening underlying demand. Higher raw material, freight and other operating costs adversely affected profitability during the third quarter as increases in these costs outpaced changes in our selling prices. We expect our pricing actions to continue supporting the recovery of these higher costs over time. We also continue to monitor developments related to raw material pricing, transportation costs and trade policy. Regardless of the market environment, we remain focused on the factors within our control, including disciplined cost management, realizing synergies from our prior-year acquisitions, aligning production schedules with customer demand to minimize operating costs, and continuing to improve the productivity and effectiveness of our manufacturing, selling and administrative activities. We also expect the investments we have made in our manufacturing facilities to generate increasing benefits through lower operating costs and additional capacity to support future growth. In addition, we will continue to evaluate acquisition opportunities that enhance our presence in markets we currently serve and expand our geographic footprint. The statements contained in this section are forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”.